Suppose that the nominal value of GDP increased by approximately 2 percent during a given year, but real GDP decreased by 3 percent. Which of the following best explains these events?
a. The money supply decreased by approximately 5 percent.
b. Prices fell by approximately 5 percent.
c. Prices increased by approximately 5 percent.
d. The real productive capacity of the economy increased by approximately 5 percent.
C
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How will the purchase of $100 million of government securities by the Federal Reserve change bank reserves and total checking account deposits in the banking system as a whole? Assume that banks do not hold any excess reserves, that households and
firms do not change the amount of currency they hold, and that the required reserve ratio is 20 percent.
When a central bank sells bonds, cash reserves throughout the financial system increase, interest rates fall, and investment spending increases
Indicate whether the statement is true or false
Even though reliable data is lacking, the Beard-Hacker Thesis maintains that the Civil War (1861–1865)
(a) was more costly to the South than to the North. (b) ended Southern prosperity through the abolition of slavery. (c) increased immigration to the U.S. (d) sped up the industrialization of the U.S.
If the demand for money depends on the ________ and the velocity is not constant, then the quantity theory of money ________.
A. level of GDP; still holds B. level of GDP; does not hold C. interest rate; does not hold D. interest rate; still holds